China restricts rare earth and tech exports

China’s Ministry of Commerce tightened the country’s rare earth export controls on Thursday. China has also added restrictions on processing technology, preventing unauthorized overseas cooperation.

According to the announcement, the government agency revealed its plans to limit exports to overseas defense and semiconductor users. The new measures by China expand sweeping controls announced in April that led to massive shortages globally before a series of deals with Europe and the U.S. resumed shipments.

China leads in rare earth production

Beijing accounts for more than 90% of the world’s processed rare earth products and rare earth magnets and 60% of global mine production. The country produces a group of 17 elements, which are vital materials in products from electric vehicles to aircraft engines and military radars.

The Ministry of Commerce acknowledged that restrictions on exporting the technology to produce rare earth magnets will be expanded to more types of magnets. The country is also planning to limit some components and assemblies that contain restricted magnets.

China, which has the top rare earth technology and equipment used to recycle rare earths worldwide, will also require a license to export these materials. The new restrictions add to the country’s extensive list of existing processing technologies.

The ministry clarified that overseas defense users will not be granted licenses moving forward. The agency added that applications related to advanced semiconductors will only be approved on a case-by-case basis. 

The Ministry of Commerce addressed concerns about access, stating that the scope of items in its latest round of restrictions was limited. It also confirmed that a variety of licensing facilitation measures will be adopted.

The announcement revealed that the ministry barred Chinese entities from working with companies overseas on rare earths without permission. According to the new rules, overseas manufacturers using any Chinese components or machinery must also apply for licenses to export controlled items.

The ministry found that certain overseas organizations and individuals had been transferring or supplying Chinese rare earth-controlled items, either in their raw form or after processing. It added that such items have been used in sensitive fields such as defense, which have had a negative impact on international peace and stability.

China sees an increase in rare earth exports

Beijing saw an increase in exports of rare earth magnets in August, reaching a seven-month high. The surge indicated a steady recovery in mineral outflows since China curbed shipments in April.

The General Administration of Customs data, released on Saturday, revealed that August shipments of rare earth magnets from China surged by 10.2% from July to 6,146 metric tons. The data also showed that the country’s production of rare earth magnets increased by 15.4% from the previous year.

The increase in exports in August followed an agreement among Beijing, the U.S., and Europe to expedite shipments and ease export controls that China had imposed in response to U.S. tariffs. Data also revealed that exports of 590 tons to the U.S. dropped by 4.7% and were down 11.8% from August last year.

The new restrictions come as U.S. lawmakers called for broader bans on the export of chipmaking equipment to China just a day earlier. The U.S. House of Representatives Select Committee on China reported that inconsistencies in rules issued by the U.S., Japan, and the Netherlands have led to non-U.S. chip equipment manufacturers selling to Chinese companies.

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